Your 20s are marked by constant debt from your student days. Salaries are low and you’re just finding your feet in this brave new world. But your 30s will be the most trying decade of your life when it comes to finances. This is when most people start to buy a house and have children.
The decisions you make in your 30s will be felt for the rest of your life, particularly when it comes to your finances. Here’s what you should be doing in your 30s.
Max Out Your Retirement Contributions
You have IRAs, 401(k) schemes, and potentially other employer-sponsored retirement programs to take advantage of. Retirement is a long way off but the earlier you save the lower your contributions can be without compromising on the amount you’ll take into your twilight years.
Remember that the majority of Americans have nowhere near enough to live comfortably after retirement. Don’t be one of them.
Don’t Create a College Fund
This may be controversial advice, but with living costs getting higher and salaries remaining stagnant this is not a good use of your money in your 30s. College funds are expensive and the cost of education is likely to be worth more than your house in a few short years.
Take care of your own responsibilities before you start focusing on the added extras. And a college fund is an added extra. It’s your child’s responsibility, not yours.
Beware of the Mortgage You Take
When you’re buying your first home, it’s tempting to get the biggest mortgage you can and start keeping up with the Joneses. This is the mistake so many Americans make and when there’s a slight change to their circumstances they lose it all.
Rather than maximizing the credit available to you, aim for something more affordable. You can always upgrade later and it will give you more breathing space to save for retirement, pay off your mortgage earlier, and to generally have more disposable income for yourself.
Just because it’s there doesn’t mean you should take it.
Start an Emergency Fund
You’re more stable and you may have dependents to worry about. Your first priority is to start an emergency fund. We recommend going even further and actively taking a portion of your income and putting it into a savings account before you spend anything at all.
This can be done by scheduling a regular debit from your bank account on payday every month. Try to save at least 15% until you have at least six months’ worth of expenses. After that, you can continue putting something into your emergency fund, but you can taper down those contributions.
If you do find yourself in a bind there are a few good online websites to find emergency cash, such as:
-Quick Cash Loans, 2-Min up to $1,000 – I Need A Loan
What about Making Investments?
After you have a solid savings fund together you should begin thinking about how you’re going to make money with your savings. Standard savings accounts don’t even keep pace with inflation so it doesn’t make sense to lock your money away. It will only decline in value.
You need to go on the offensive and use the power of compounding to succeed. This means that you should also be setting aside some of your savings for making some investments.
Let’s take a look at some of the investments available to you:
- Your house. This is the most important investment of all and it will likely turn out to be your most valuable asset.
- Blue chip stocks. These are the companies that will provide you with low returns yet will protect your money better.
- Dividend stocks. They are companies known for paying out lucrative dividends on shares and can offer you an extra income to continue growing your investments.
These are the investments you should focus on in your 30s. Unless you know about investing, you’re risking your money by opting for things like mutual funds and penny stocks.
Some managers advise people in their 30s to take risks, but even if you do have the time to catch up you don’t want to be in that position in the first place.
Last Word – The Key to Saving
Live frugally, focus on the long-term, and spend conservatively within your means. And remember to leave yourself some money to give yourself a little fun along the way.
Amanda L Grossman
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I’m not super-human, nor am I a financial advisor (you can stalk my 
I think one of the best things my husband and I did in our 30’s was to max out our retirement. I can also related to some mistakes as well. Like getting the wrong type of mortgage. Sometimes I wish I could turn back time.